Gas prices headed lower

The Energy Department and AAA predict a drop this year, but they don't account for variables like storms or wars.

By Jason Notte Jan 14, 2013 9:27AM

Filling fuel tank -- CorbisFor perhaps the first time since the fiscal cliff debates began, the government has come up with an item whose price won't increase in 2013: gasoline.

Thanks to high supply and weakened demand, the average price per gallon should fall to 5% to $3.44, according to the Energy Department. That's still well above the dreaded $3-a-gallon mark and the third highest average fuel price ever, but it's 19 cents lower than last year's record $3.63 average.

It's also an average savings of $205 per household in 2013, which theoretically could put $25 billion back into other areas of the economy -- or, you know, into Americans' savings. That's assuming the Middle East doesn't flare up again, the hurricane season doesn't yield another Superstorm Sandy and the nation's refineries stay open and keep running at capacity.

It also ignores the expiration of last year's payroll tax deduction, which increases the Social Security levy from 4% to 6% this year and will cost households making $40,000 to $50,000 an extra $600 in 2013, according to the Tax Policy Center. Also, the Energy Department's recent history with this kind of prognostication has been spotty at best. In 2011, it predicted average gas prices around $3 just before Libya's revolution halted oil production and drove the national average to $3.53. Last year's prediction was $3.45, which also fell more than a little bit outside the mark.

AAA is steering away from the government annual average and, instead, is focusing on upcoming fluctuations in fuel prices. While AAA's average U.S. gas price sits at $3.31 per gallon, the motorist organization predicts that price could go as high as $3.80 this spring before dropping to $3.20 in mid-summer. That would be the lowest average gas price Americans have paid since February 2011, but may be short-lived depending on what hurricane season brings.

Of course, those prices are also still highly contingent upon where drivers live. Right now, drivers in Utah have the lowest gas prices at an average $2.88 a gallon, while New Yorkers are still dealing with Sandy's aftermath as they pay $3.75. One region's year of cheap gas could be another area's fuel crisis.

More on Money Now

Jan 14, 2013 5:13PM

As a nearly lifelong Exxon stockholder, all I can tell you is that the folks who get the lion's share of the price of a gallon of gasoline are the taxing entities: local, state and Federal. They get it at the pump, and also through the earned incomes of the oil company's employees, not to mention taxes on land the company owns, etc, etc....the net profit they make is around a nickel a gallon. The only way they can do as well as they do is through immense product volume. Said volume will go up this summer as the Chinese, Indian, and European driving seasons hit, not to mention the US as well. BTW, oil is taxed right at the wellhead, and goes on being taxed until it finally goes into your fuel tank. Having said all that, my personal choice of vehicle to drive would be a Mercedes diesel (for the sake of the extraordinary fuel range they have, etc.) but these days, because of the cost of medical I don't have enough money to pay attention, so there we are....


Jan 14, 2013 4:51PM

Cool, I need to pick up several loads of compost. If gas is at or below  3 /gallon I can afford to make the trip several times. Might even start stocking up on next years firewood supply.

Jan 14, 2013 4:40PM
Sorry homes but gas is the same price it was in 1966. The difference is the Federal Government that prints Federal Reserve notes that make them worth less and less. Here is something for you, in 1966 gas was about .25 per gallon. Take a 1966 silver quarter and today it is worth, silver value only, around $4.00. Now what cost about $4, why a gallon of gas. So keep blaming those mean old oil companies, it is just what the Dumbocrats and Republicks want you to do.
Jan 14, 2013 4:33PM
Not going lower here in California.  Gone up twice in the last 8 days, not down..
Jan 14, 2013 4:02PM
Haven't seen gas come down in Tampa Bay area.  As a matter of fact it has gone UP.  Where does AAA get it's information on gas prices and why is it only on regular gas?  What about the prices of medium grade, premium and diesel?
Jan 14, 2013 3:52PM

The Oil Barons,

Lest we forget, one of the biggest crooks to ever come down the pike in our industrial age was none other than John D Rockefeller. In the late 19th century his tactics and ploys created the Standard Oil Co which consolidated all aspects of the petroleum industry... from the wellhead and the transport of crude to refining and the retail of gasoline. He became the world's very first Billionaire in 1892 and his strategies regarding the petroleum industry literally wrote the 'play book' for all of the oil barons who have dutifully followed in his footsteps. As it was 120 years ago, it remains true today. The obscene and enormous profits of the oil industry enable it to purchase all of the power in high places in order to dictate petroleum business policy and to maintain their gluttonous profit-imperative at all costs. If he were here today John D would be very proud indeed of his legacy.

Peace to all ~


Jan 14, 2013 3:24PM

Here's a little something I have wondered about. Diesel fuel use to be cheaper then gas. More diesel engine vehicles were produced. Along came the 2 wars and the military was using more diesel which supposedly created a supply crunch on diesel. One war is ended so logically diesel usage by the military should have dropped which should have eased the crunch on diesel. Diesel prices still 60 to 70 cents higher then gas.


So, what is one to think when something like this is happening? If we have an abundance of oil to produce gasoline and diesel is done on the first crack of the oil shouldn't these [prices also have come down drastically? Does one think that gasoline prices will drop? Are gasoline and diesel prices being manipulated to keep them artificially high? Are we getting shafted all the way around? Will our wonderful president and all the elected officials in D.C. (you know, the community organizer and the same idiots who have us in such a mess) do some investigation to find out why this is going on? Hmmmmmm!

Jan 14, 2013 3:18PM
I think MSN can drive the price up or down by writing a foolish article. Try leave it alone.
Jan 14, 2013 3:13PM
Gas was high last year because BP paid 20+ billion for clean up of oil spill to the Obama administration.  The traders and media hide that fact with excuses, now gas is going down because the 20+ billion has been paid via the gas buying public.
Jan 14, 2013 2:58PM
Whoever came up with the bright idea of putting a commodity like oil that we all need to live in the hands of Greedy Wall Street Traders and Speculators should be deported. This was a stupid move that has hurt and will continue to dominate our economic downfall.
Jan 14, 2013 2:48PM
Get gas down to a buck and a quarter a gallon and watch this economy hum again.
Jan 14, 2013 2:44PM
Either obammy is intentionally trying to destroy the U.S. and is very good at what he's doing or he is just dumber than a bucket of cum.
Jan 14, 2013 2:42PM
I wish bam bam would take a permanent vacation,  the world would be a better place..
Jan 14, 2013 2:39PM
One would think our community organizer could figure this economy out and get it in gear again.  Was Chicago the community he organized?  They're doing really well right... And Chicago has the most extreme gun laws and guess what they lead the country in crime.  So one should come to the conclusion that banning guns will make it a warm and fuzzy place, right...
Jan 14, 2013 2:39PM
Jan 14, 2013 2:36PM
MSN is a joke and beware if you disagree with their libtard values they will kick you off...
Jan 14, 2013 2:11PM
Life is good here in Minnesota.  Gas was $2.86/gal, had a little hiccup back to $2.99, but now is settling back down to $2,94.  So if things keep going, we should be looking at $2.50/$2.60 by June.  Big reason gasoline is so cheap up here is because a lot of it comes from Canadian refining.  Their oil inventory is so high they just refine it up here and sell the gas.  Costs too much to ship it out.  And thank God the stupid pipeline has not/will not be built.  The only reason for the pipeline is for Canada to get their filthy/fracced oil from up here down to the Gulf Coast and on to China/Japan.  So to Canada and our brethren in North Dakota, keep fracking and refining, because cheap gas really helps out the ol' pocketbook.
Jan 14, 2013 2:05PM
What BS every body knows that as the economy improves gas prices will raise. The Obama administration missed a golden opportunity too use the stimulus money too create a natural gas distribution system across the U.S.. Installing natural gas pumps at every truck stop and providing tax incentives for truckers too convert would have been a great start.
Jan 14, 2013 2:01PM
If you applied the normal inflation rate from the last 30 years to gasoline, the price should be over $5.00 a gallon.

Be happy and stop complaining.
Jan 14, 2013 1:57PM
what??! you say razor blade production doubled? I still cant find one.
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